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#2. You did something else with it. You get a check each month. That is something else. That is getting the cash. You did not roll it over to another retirement account or IRA or put it back into the same pension account.
Good question. Your instinct probably isn't right here because you probably did not put the money you got (via monthly direct deposit or check) into another retirement plan. (That would be very unusual.)
Instead you likely put it into a spending account or an investment account. The money in that account doesn't get special tax treatment as would a retirement account. I.e. interest it earns will be subject to tax at once.
What the question is trying to get at whether or not you took the money out of one retirement account (say from a Fidelity IRA) and put it into another retirement account (say a Vanguard IRA). That is called a rollover and in most cases is not taxable. (But then it doesn't count as a part of a requirement minimum distribution).
Please feel free to provide more details if you still have questions.
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